A total of 941 shareholder proposals were submitted this proxy season making 2022 a record-breaking year. Georgeson analyzed the voting statistics for Russell 3000 companies in their recent proxy season look back report.
562 of the 941 proposals went to a vote. Of these, 60 were related to environmental issues (25% successfully passed), 231 for social issues (10% passed) and 271 for governance (18% passed).
Noteworthy trends include:
Environmental: Climate related proposals continue to be a focus increasing from 121 submissions last year to 177 in 2022. Not only have the number of submissions increased, but the requests have also become increasingly more specific and demanding. Many of the 2021 proposals focused on general reduction of greenhouse gas emissions. However, the majority of this year’s called for explicit target reductions in Scope 1, 2 and 3 emissions. Overall, shareholder support levels have not risen - in fact, BlackRock indicated that certain climate proposals have gone too far and are “overly prescriptive.” In July 2022, BlackRock cited a number of categories that they would not endorse, including setting absolute Scope 3 GHG emissions target reductions and eliminating financing for traditional energy companies, indicating it was not “consistent with their client’s long-term financial interests.”
Social: DE&I continues to be of interest with proposals seeking reporting on data beyond what is disclosed in the EEO-1 report. Diversity information around recruiting new employees, retention and promotions and reporting on progress towards stated diversity and inclusion goals topped the list. 33 of the 44 proposals were withdrawn or omitted, likely driven by companies voluntarily increasing their disclosures and coming to agreements prior to a vote.
Additional areas gaining attention were civil rights and racial equity audits requesting that a company’s internal and external procedures are reviewed to determine if adverse impact exists for people of color and protected groups. While none of these proposals passed in 2021, three racial equity and five civil rights audit proposals passed in 2022. Pay gap reporting also saw its first two proposals pass and average support for these types increased from 30% to 38% year over year.
Finally, the number of independent chair proposals increased from 33 to 40 this year, with average 30% support. The percentage of combined Chair/CEO roles in the S&P 500 declined to 44% this year (down from 49% in 2018, when companies were almost evenly split).